The best I can work up is that January TDs came in at only 256. That is slightly down from December’s 269 and continues the leveling or downward trend. NOSs were up to 470 from December’s 420, only eclipsed by the 481 NOSs in July. Gross NODs came in at 790, the highest on record, and up over 15% from December. I am looking forward to TICOR’s net NOD numbers – it seems like there are a HUGE number of HOAs filing NODs. Their liens just didn’t take care of the problem, and they are upping the ante to try to get funding to maintain their facilities.
When you consider the above figures, remember this is during a month when all the GSEs are in a foreclosure moratorium mode. Their filings are definitely down, but they still account for some of the action.
I ran into an appraisal in progress during the afternoon dog walk. I asked the appraiser how he comes up with a value in this market where there are very few comparable sales. With a straight face, he replied "With a dart board". And I sort of had to believe him in his methodology. The house was 2400 Blue Heron. It was purchased a couple years ago for $550,000. When the owner got into trouble, it got listed briefly for $645,000, then dropped several times until it reached $335,000. It went TD, relisted at $299,000, and went to contract in a few days. But the meeting really got me thinking about what the appraisers are appraising, and how they are doing it. I’m leery.
Some of the Montage contract holders started getting certified mailings with their "official" unit prices this week. The consensus so far is that the prices offered are quite a bit above what the contract holders were expecting. Check out the dialog at montagebuyer , and feel free to post your comments.
The Center for Region Studies has issued their year end reports, and they are a must read for you data dogs. I was getting pretty paranoid when the November numbers weren’t posted, but they have made nice-nice finally. Don’t miss the Foreclosed Homes Resale Reports – my optimism last month was misguided, based on the latest numbers. Read their data, and post what you think.
I’m working up a post on how to manage your foreclosure for fun and profit. Anyone interested, or is it just too depressing?
I got my Bachelor’s degree from Miami University, Cradle of Coaches, and where Big Ben proved his stuff before tasting the candy and going pro too early, so I’m invested in Sunday’s game. I pick the Arizona Cardinals by 5! But then again, I own real estate. What are your odds?
Sully
Mike, I like the Cardinals – but Steelers by 10!
DonC
Here’s a positive thought. A few people have mentioned affordability, most negatively. But one bright side of the downturn and the low interest rates is that the affordability of home ownership is at an all time high.
http://economix.blogs.nytimes.com/2009/01/30/housing-affordability-at-record-high/?hp
Big move off the lows of just a few years ago. Once you’re at record highs, it’s hard to imagine affordability getting that much better.
inclinejj
Miami Of Ohio..a buddy of mine and his wife went there..
The Redhawks
I like AZ..I think AZ’s WR are too good..Depends on the AZ front O line
Back to the NOD’s..Probably about 2/3’s of the notice of trustee sales down here in the Bay Area I have been tracking cancelled..will look for them to pop up down the road..
I have been noticing that a lot of higher priced property in Incline is starting to go NOD. Will keep an eye on this the next couple months..
I have noticed a huge amount of HOA’s filing NOD’s. I also notice alot of the registered owners are banks..I figure the HOA’s are perfecting the lien by filing on the property..I don’t know cause they always check the HOA for delinquent fees..
smarten
InclineJJ states he “ha[s] been noticing that a lot of higher priced property in Incline is starting to go NOD.”
I wouldn’t say “higher priced property” inclinejj but rather, mid-priced [for Incline] property. Yes there have been one or two $2M+ properties go into foreclosure but it’s not yet a tidal wave.
I find this phenomena interesting because of the fact so many delusional agents here assert all Incline homeowners are so well heeled, they don’t have mortgages [how then does one explain the recent explosion of NODs?].
This demonstrates our little community is finally starting to understand that really, we’re no different than anywhere else. Surely Montreux, St. James Village and Arrowcreek can’t be far behind!
BanteringBear
Affordability is NOT at an all time high in the Reno-Sparks area. Is that what you’re trying to insinuate, DonC? That chart is for the entire US and, considering the source, I’m not even sure I trust the data.
Sully
Housing affordability probably is at a record high, but what about confidence?
An interesting quote from one of the Davos Conference participants:
“Confidence grows at the rate that a coconut tree grows, and it falls at the rate a coconut falls,”
BanteringBear
Nothing gets me riled up more than people spewing misinformation whether it’s by accident or done intentionally. In fact, that’s the MAIN reason I took to blogging about housing nearly 5 years ago- to refute the absurd statements which were vomited forth by industry shills.
Here’s a link which shows housing affordability for the Reno-Sparks area over the past 10 or so years. For those having trouble “imagining” a continued drop in house prices, and an increase in affordability, perhaps this will help to clear things up for you.
http://www.housingtracker.net/affordability/nevada/reno
DonC
BB — Good Morning!
You do realize of course that the affordability index numbers you’re citing as evidence are from the end in the 3rd quarter of 2007? And that the numbers in the NY Times article go through the 4th quarter of 2009?
As soon as I looked at the graph you cited I guessed from its shape that it was either incomplete or the data points were time-lagged. Eyeballing the two graphs suggests that they are entirely consistent — the dates of the troughs look absolutely the same. Your numbers just aren’t current so they don’t show the subsequent peak following the 2007 trough.
In any event, this does not make me think you are engaged in some nefarious plot to deceive anyone. People can make mistakes. Nor does it get me riled up. It actually makes me smile. 🙂
BanteringBear
“You do realize of course that the affordability index numbers you’re citing as evidence are from the end in the 3rd quarter of 2007? And that the numbers in the NY Times article go through the 4th quarter of 2009?”
Thank you for pointing that out. Oddly, the information on their main page is current, but the affordability page is not. I will need to find the current information, as the link you have provided does not contain it either. Can you provide something specific for Reno-Sparks showing that affordability is at an all time high? My guess is that you cannot, because we are not there.
In inflation adjusted terms, we have not even corrected back to pre-bubble pricing. Further, as many have pointed out, wages are stagnant to declining (deflation will not help this). As wages fall, housing prices will have to continue to fall to maintain affordability. We have not seen the price bottom, IMO. Until that is reached, affordability will continue to improve.
smarten
Mike states, “I ran into an appraisal in progress during [and]…asked…how he comes up with a value in this market where there are very few comparable sales? With a straight face, he replied with a dart board.”
I’ve wondered the same thing for the same reasons for some time. When I run into a delusional agent who’s representing a seller who’s asking price is equally delusional I will ask if the agent can present to me a CMA which justifies the asking price? Invariably they cannot [they can, but the comparables are either terribly stale; not comparable; or not even actual sales].
So let’s describe today’s marketplace for what it is. The seller’s asking price cannot be supported because it has been plucked from thin air. The buyer’s offer cannot be supported because it is equivalent to throwing darts on the wall. Now the independent third party professional’s opinion of value represents the same methodology. How then can our good friend Michelle Plevel chastise any buyer [and his/her agent] for presenting a disgustingly low ball offer?
Move to Reno
You guys can talk about “affordability” all day long but nothing will change until the banks start lending again to folks who can afford to buy.
DonC
BB – On the one hand the affordability index is a good thing since it suggests that the median family can buy the median house. This is mostly a result of falling prices accompanied by falling interest rates.
On the other the number just illustrates how bad things are. Even if houses are affordable no one is buying.
It does suggest, however, that if interest rates stay low, and jobs stabilize, we could see a fairly quick recovery from current prices back towards the historical norm. If jobs continue to be lost at the high rate we’ve been seeing then houses will become even more affordable, which is another way of saying prices will continue to decline.
Additionally, while the price of housing is ultimately a function of job creation, at the moment a lot of people are fearful of losing their jobs. This fear is doubtless playing a part of the overall demand destruction for housing, along with all manner of other goods and services.
DonC
MTR says “You guys can talk about “affordability” all day long but nothing will change until the banks start lending again to folks who can afford to buy.”
This is a very good point. I saw a trailer for a CNN special that was to explore whether housing, the financial system, or jobs was the main problem facing the economy. I just thought to myself: The answer is “Yes”. Basically all three are linked, and unless you address all three we’re going to have a mess on our hands.
Of the three I’d say jobs and financing are the biggest drivers. If the stimulus bill generates jobs, or at least staunches the job losses, and if Treasury, the FDIC, and the Fed can figure out how to get lending moving, housing will recover on its own.
Back2Basics
There was an article today in the RGJ on the same “affordability” subject.
http://www.rgj.com/article/20090130/NEWS/90130060/1321
While saying that most locals still feel real estate is too high, they quote Kris Layman, president of the Reno/Sparks Association of Realtors saying that, “This is also the first time in five years that the median income earner in Washoe County can afford the median-price home.”
Sounds convoluted to me.
gobagheera
Sure, the median prices are coming down, but with the low employment numbers and a lack of confidence, we’re sure to exceed the “affordability” level before housing prices stabilize. Besides, we could be seeing a decrease in median income to lower the affordability.
Martin
Speaking of asking delusional agents representing delusional sellers for a recent comp to justify the price, I note that what we have had from Guy on Amazing Arrowcreek is………..silence.
I do note that the price has been dropped $50K…a whoppig 3% reduction. This ought to fall right into BB’s thoughts about the silly price drops.
So, Guy?
Or is it impolite to ask Guy to explain the asking price of his listing by reference to recent comps? Or ANY comps?
MikeZ
Here’s a positive thought. A few people have mentioned affordability, most negatively. But one bright side of the downturn and the low interest rates is that the affordability of home ownership is at an all time high.
All-time high affordability? So says the NAR?
Complete bullsh*t. The NAR still hasn’t learned the value of TRUTH.
CommercialLender
So my 2 cents in this whole discussing is take-home pay and its relation to what house one can afford. If r.e. taxes stay high (another RRB thread), spouse loses a job, bonuses are cut, tips are down, raises are – what raises!?, commissions in just about ever sector of the economy are down, stocks are down (downpmts), I/O loans are hard to come by, downpayment requirements are up, and the general housing ‘consumer’ rightly assumes taxes are going up, then the old denominator of median income is going down whether the data sources say so or not. And btw, this data -all of it – are lagging indicators. On the bright side, gas is down and home prices are down.
But if mortgages must adhere to some payment ratio (33% debt to income, 35%, whatever) then when a small decline in perceived or real income means around 3x decline in homebuyers’ ‘affordability’. And of course, underwriting standards are more restrictive now.
I head so much talk of the ‘stimulus’ and what will the govt do to turn this around. But I want to scream at my TV and computer: the only cure is time. The housing market is going down b/c the economy is deflating, nothing anyone can do about it except NOT take on additional risky debt. The govt thinks throwing money at it will bolster consumers’ moods and magically turn the economy around, but time will show us this is falicy.
DonC
CL – The idea that “only time” can solve the economic problems really goes against what we know about economics.
To begin, we have to understand that we’re in a liquidity trap, which, broadly defined, means a situation in which standard monetary policy isn’t going to turn things around.
Second we have to understand that when an economy is in a liquidity trap time doesn’t cure all ills. Japan more or less decided that it would let time solve a problem like this. It waited almost twenty years and time alone didn’t do a thing.
On the other hand, countries like Sweden which did act got very good results. The fact is that fiscal tools do work. They’ve worked countless times before so I don’t really understand those who say they don’t. In my mind the idea that you should just let the economy take its course is akin to an ER doc looking at someone with a gunshot wound and deciding that the only remedy is “time”. In both cases you should use the tools at hand to fix the problem.
My general sense is that the view the economy can recover on its own represents a faith based rather than a scientific approach. The underlying “belief” is that markets will self-organize and self-police so that they perform perfectly absent government intervention. For those holding this belief, a market failure has to be the result of a government intervention (because perfection can have to defects), and the only realistic solution is to leave the markets alone and they, being the perfections they are, will heal themselves.
A more realistic viewpoint is that markets are not perfect. They mess up. And when they do you have to intervene both to fix them and to help address the fallout from their failure. Since history shows that such interventions do work, it’s hard to understand why you don’t use the tools at hand.
Sully
Don, are you referring to the current bailout plan, which isn’t working or the new stimulus plan, which isn’t much of a stimulus but an enormus welfare plan?
BanteringBear
The main problem facing this country and it’s citizens is a lack of well paying jobs. Over the course of the past seven or eight years, people were incurring and relying upon debt in order to maintain a standard of living which was otherwise impossible. It was not sustainable for very obvious reasons, and that’s why we find ourselves where we are today.
There are many, many reasons for the current economic crisis, but the most glaring problem we face is the erosion of our manufacturing base and the subsequent decline in exports. This has seen us transition from a producer and exporter of goods to a consumption and service based economy, with a massive trade deficit and low paying jobs as a biproduct.
I see NOTHING in any of these “bailout” or “stimulus” packages which addresses these problems. Therefore, I have to conclude that we’ll not see any appreciable long term benefits from them. Simply throwing money around is of little help.
DonC
Sully:
First, if you don’t believe the banking bailout prevented a financial meltdown I don’t know what to say. For all its flaws, both in the abstract and in its implementation, it averted what was going to be one heck of a disaster. If you want proof, just look at the spreads between government and AAA rated debt.
Second, we seem to be repeating what we’ve heard on Fox News or talk radio (though I’ve noticed that even conservative economists on Fox are pointing out the fallacies in this line of argument). Just claiming that something is welfare doesn’t make it so, unless of course the listener is willing to accept anything just because Rush Limbaugh said it.
You say the stimulus is all welfare. Fine. Prove it. Come up with specific examples with price tags and we can discuss whether this it’s welfare or no. You’ve got to show that $800B is all welfare. Go to it. Otherwise all we have is a lot of hot air.
Finally, as we go down this road, let’s agree that no matter how much we think tax cuts are a good idea in many instances, at the moment they are the dumbest possible things we could pass.
DonC
BB – I agree with this completely. (Scary eh?).
I’d only point out that you have short term and long term issues. The erosion of the manufacturing base is a long term problem. The current financial problem is a short term problem. We need short term fixes for the short term problem and long term fixes for the long term. They’re not the same.
Sully
Part of the bailout plan was to relieve pressure on the banks, to start lending again, instead all it’s doing is giving them cash flow and time to continue to try and get delusional prices for their bank owned properties. As smarten mentioned in Linear – as to how Wells Fargo prices its foreclosed properties.
The new stimulus plan only mentions remodeling federal buildings. The energy part is too vague to determine if its mostly for research or actual construction. The majority of the money is targeted for pork, as it will do little if anything to increase employment, which BTW is the whole idea behind the stimulus plan – stopping the layoffs and increasing employment.
How else would a stimulus plan work?
Phil
The new stimulus plan –
Give money to those who can least afford a house and lend them the money from a national bank backed by the taxpayer!
What is rediculous is this is what was happening to create the housing bubble (excpet for the national bank thing).
It might even work for a few years. Except when China stops buying our treasury notes. Ooops that already happened! Too late. 🙁
BanteringBear
What the politicians and special interests are trying to do is prop up an unsustainable economic model. In the long term, it’ll do more harm than good. What’s the benefit of millions of new construction jobs if they go to illegal alien labor? Why should financial institutions be rewarded with TARP money as they outsource US jobs to cut payroll? Why cut corporate taxes of companies who will continue shedding jobs?
Until the dunderheads in charge start asking and aswering hard questions, this economy will continue it’s frefall into the abyss. I’m not only underwhelmed, but frightened by the complete lack of competence and accountability of those running this country.
BanteringBear
frefall = freefall
Will we ever get an edit button?
Move to Reno
A lot of valid arguments presented. It’s a complex problem made more difficult by special interest groups wanting payback from both sides.
The banks have to start lending again to really big construction projects, like $350 million and up. This country runs on energy, we use about 25% of the worlds total (or use to) and we need to upgrade our electrical grid and find some way to kick our addiction to foreign oil. This is the area where the government needs to focus on. The global warming thing is scary and it will take big money to make things right. That means a lot of high-paying jobs in construction and engineering.
As for the housing crisis, the recent idea of renting the property to folks in default sounds like a possible short-term fix. Housing is one area where I think time is part of the solution, along with some tax credit carrots to encourage buyers to pull the trigger in these uncertain times.
CommercialLender
DonC,
Loved your rebuttal to my comments. Of course, this all depends on one’s point of view. There are those who feel Keynesian policies of the early 1930’s actually solved for the woes of the great depression. Others found FDR’s policies to be of very little help, in fact unemployment stood in 1939 at the same spot as 1932. Sure, he built a ton of National Parks, and some other good policies came about, but overall his policies did little to solve for the crisis. ‘Twas time, and an external shock of war (factory productivity, employment, exports) that got us out of the quagmire.
What the gov’t is trying to do with this oft touted ‘stimulus’ and TARP is to try to inflate the banks’ balance sheets back to where they were so they can resume the lending standards they enjoyed 2-3 years ago. With that, consumer confidence and spending is supposed to magically increase back to ‘normal’. The problems are several fold: this is the governmental equivalent of catching a falling knife, and the govt’ is mandating via taxpayer funding and lending mandates the markets’ overall demand. That is, they are trying to re-create demand for housing by forcibly turning on the lending spigot. So what are banks to do with their money – throw it away to only watch these new loans default? We very much saw this over the late summer where those who received early assistance from the government through the spring foreclosure plan (can’t recall the name) ended up right back in foreclosure by a factor of what, ~50+%? But the taxpayer, and homebuyer, ‘aren’t buying it’.
And toward taxes, keep in mind every dollar of ‘stimulus’ comes from a taxpayer who has more than a dollar less to spend or hire new workers (more than, because of the bureaucratic cost of the government intervention itself). The government by design is a very inefficient economic stimulant, and this is the main fault of Keynes logic, IMO. However, giving a tax break to corporations is about the most efficient jobs-creator known, because it is immediately transferrable to the bottom line and results in economic growth (wages, creation of jobs, R&D, dividends, et.al.).
So, gov’t intervention and Keynesian policies don’t always work, and I submit they won’t work in the current stimulus and TARP plan. No, they will only exacerbate the problem or at best prolong the inevitable market bottom that must be reached one way or the other. I submit let’s reach it in the most prudent way possible: by incurring the least amount of national debt and smallest resultant tax burden necessary. And I have not touched on the very obvious effect of the value of the greenback when the govt borrows excessively.
You mentioned Japan. You forget the government did in fact institute very lax monetary policy that quickly reached the point of diminished returns, and for 18+ years it produced no positive results except for individuals dabbling in for-ex trade. Yes, they were asleep in other areas, and if you are a student of Japan circa the past 25 years, please do share for all (I’m certainly no expert there). BTW, any honest discussion of Japan has to include not just the economic theories we are discussing, but the psychology of their culture where banks refused or could not accept selling assets at a loss but instead held on for decades thinking there was more value than reality would dictate. For ‘honor’ or whatever one would call this? This to me was as much the problem as anything else in their past 20 years, perhaps the biggest problem.
I’m no libertarian and I do believe in gov’t instituting and enforcing a set of rules, but I don’t subscribe to nationalization of banks, nor using taxpayer dollars to prop up anyone’s lifestyle or bad investments including banks, nor do I subscribe to strict Keynesian monetary policies. But I do believe the way out of this is ‘time’ for the markets to correct and reset. This will be quite painful for very many, but necessary, medicine for everyone.